Yahoo shows signs of life, Alibaba in the cards again

Yahoo Inc. offices, housing its Search Marketing Group, are pictured in Burbank, California, in this October 14, 2010 file photograph. Yahoo Inc said it earned net income of $286 million, or 23 cents a share, in the first quarter. The Internet company reported net revenue,...
REUTERS/Fred Prouser/Files

SAN FRANCISCO Yahoo Inc reported an uptick in revenue that marked its first quarterly sales growth in three years, as new Chief Executive Scott Thompson spearheads the latest attempt to revamp the struggling Web company.

Thompson told analysts on a conference call that Yahoo was once more exploring a simpler deal to try and "monetize" its 40 percent slice of China's Alibaba, a stake valued at billions of dollars and that Yahoo once discussed unloading.

Thompson did not elaborate, but his comments suggest the company -- which broke off deal talks with Alibaba and Softbank last year -- was willing to go back to the negotiating table.

Analysts pointed out that much of the increase in quarterly profit came from Yahoo's earnings in equity interests, which more than doubled year-on-year and comprise mainly its investments in Alibaba as well as Yahoo Japan.

"Their minority stake in their investments is generating more profit than their core business," said BGC Partners analyst Colin Gillis. "Here is the one piece that is always sad about Yahoo. Their income from operations was about $169 million and their earning and equity interest was about $172 million."

The core business beyond China and Japan looked mixed.

Finance chief Tim Morse told Reuters in an interview that better-than-expected pricing for its search ads helped the company increase its quarterly net revenue year-on-year for the first time since the third quarter of 2008.

But its core display advertising business declined 4 percent during the first quarter.

Shares of Yahoo, which closed Tuesday's regular trading session at $15.01, were trading up at $15.38 in afterhours trading on Tuesday.

Yahoo said it earned net income of $286 million, or 23 cents a share, in the three months ended March 31, versus $223 million, or 17 cents a share, in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for EPS of 17 cents.

It forecast net revenue in the second quarter of between $1.03 billion and $1.14 billion.

Once one of the Web industry's pioneering companies, Yahoo has seen its growth stunted in recent years amid competition from Google and Facebook.

Thompson, the former president of PayPal who took the reins in January, announced plans this month to lay off 14 percent of Yahoo's staff and reorganize the management structure.

Investors are looking for more details of Thompson's strategic plans during Yahoo's conference call with analysts on Tuesday afternoon.

"We know we have work to do. We aspire to being a higher growth and more profitable company, but it was a solid quarter," said Morse.

He added that the broader online advertising market is affected by economic uncertainty in Europe and parts of Asia and that industry growth rates will be more moderate than the past couple of years.

The company's net revenue, which excludes payments to partners, totaled $1.077 billion in the first quarter, compared to $1.064 billion in the year ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for net revenue of $1.06 billion.

(Reporting By Alexei Oreskovic; editing by M.D. Golan)

Next In Technology News

WASHINGTON The White House said on Thursday that it raised concerns about China's new cyber security law during a meeting with a Chinese official after the latest round of talks between the two countries on cyber crime.

MUMBAI Fugitive Indian businessman Vijay Mallya said on Friday that his Twitter account had been penetrated by a hacking group called Legion, which posted links to what it alleged were details of Mallya's bank accounts, offshore investments and luxury cars.

FRANKFURT Technical trade secrets were stolen from the steel production and manufacturing plant design divisions of ThyssenKrupp AG in cyber attacks earlier this year, the German company said on Thursday.

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: